UPDATE 5-Oil up for 7th session but first-half drop biggest since 1998

* Libyan oil production exceeds 1 million bpd -source

* Analysts cut 2017 crude oil forecasts again -Reuters poll

* BAML cuts price forecasts on deepening oversupply outlook

* Chinese factory growth quickens - Chinese government data

* Coming up: Baker Hughes U.S. rig count, 1 p.m. EDT/1700 GMT

* CFTC Data at 3 p.m. EDT (New throughout, updates prices, market activity and comments; new byline, changes dateline, previous LONDON)

NEW YORK, June 30 (Reuters) - Oil climbed for a seventh straight session on Friday as a weaker U.S. dollar and stronger demand data from China lifted depressed prices that were still set for the biggest first-half decline since 1998.

Trading volume was low ahead of the U.S. Independence Day holiday weekend.

Brent and U.S. crude fell about 19 percent in the first half of 1998. Oil prices have generally increased in first half of most years.

On Friday, Chinese government data showed factories grew at the quickest pace in three months, according to the Purchasing Manager's Index.

"Good PMI data from China certainly gives you hope that demand is growing globally," said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management.

Benchmark Brent crude futures were up 38 cents at $47.80 a barrel at 11:30 a.m. EDT (1530 GMT). U.S. crude futures rose 52 cents, or more than 1 percent, to $45.45 a barrel.

Both benchmarks were on track for weekly increases of more than 5 percent.

The U.S. dollar fell to its lowest since October in early trading, making dollar-denominated crude oil less expensive for investors using other currencies.

Crude hit a 10-month low last week as rises in output revived concerns about global oversupply, but data this week showing a temporary dip in U.S. oil production has dented the bearish sentiment.

The persistent global crude glut has knocked 16 percent off Brent crude so far this year, even though the Organization of Petroleum Exporting Countries and other major producers have agreed to cut production about 1.8 million barrels per day (bpd).

Libya, one of two OPEC members exempt from the cuts, had surged past 1 million barrels per day.

Speculators have cut long positions in recent weeks. The market has also seen traders building short positions, said Haworth.

Reuters' monthly oil price poll showed analysts have reduced their price forecasts again, with 2017 average Brent and WTI prices lowered by more than $2 since last month.

Bank of America Merrill Lynch analysts cut their forecast for average 2017 Brent crude prices to $50 a barrel from $54 and WTI to $47 from $52. They cited rising output from Libya, Nigeria and U.S. shale fields, which coupled with weaker demand growth should keep the glut bigger than expected.

At 1 p.m. EDT energy services company Baker Hughes will release data on U.S. rig counts. U.S. drillers have added rigs for 23 straight weeks. (Additional reporting by Karolin Schaps in London, Naveen Thukral in Singapore; editing by David Clarke)